Welcome to Saving Money with Andrew!
61% of Americans, and 36% of those earning $250,000 or more, live paycheck to paycheck. It’s natural to spend what’s available, and Americans are particularly susceptible to lifestyle creep and peer pressure to spend.
In our inflationary times, this can be tough on your wallet, as this recent Bloomberg article on the post-pandemic wedding boom demonstrates:
Consider the case of New Yorker Issy Berkey, who’s been invited to a whopping 10 weddings this year — eight of which would require travel out of state. The 27-year-old consultant decided to skip one because it was in Italy, and plane tickets were far outside her budget.
“I just had to realize that saying no was easier than going,” Berkey said. Still, she’s planning to attend eight weddings, in locations ranging from Arizona to Canada to Chicago, plus bachelorette parties requiring additional travel in some cases. Her estimated total costs? $20,000.
It’s not just big-ticket items and experiences. As people earn more, it’s tempting to spend more on everyday things, whether on a belief that higher prices mean quality (sometimes!) or that we “deserve” something.
But these incremental expenses snowball, leaving many perpetually unable to build a financial safety net, let alone save for retirement. If you’re like the 61% of Americans in the survey, what can you do?
Consider Zero-Based Budgeting
Many companies use zero-based budgeting, starting their budget from zero each month/quarter/year. Executives must justify each new expense rather than starting from the last period’s budget. While it’s impractical to live life like this, try some of these principles when you start a new month. Think about each expense as if it’s a new one. Just because you spend $40 on a DoorDash dinner order every week doesn’t mean it’s a great idea. Does it make sense?
Review Your Credit Card Statement
Sit down and look at your credit card statement. Review those recurring subscriptions, cancel ones you no longer use, and look for promotional offers on those you do. One useful trick with streaming services—if you aren’t using it at the moment, cancel it and see if you miss it. You might be surprised.[1]
Resist Social Pressure/Be Willing To Be A Little Weird
This is hard. I’m fortunate not to have been invited to many faraway weddings in my 20’s and 30’s, but I’d like to think that if I were Issy Berkey in the article above, I would have pushed back or said no to a few of them. $20,000 is a staggering amount of money to spend in a single year on weddings, and that can permanently set back your plans to buy a home, repay student loans, or take full advantage of tax-preferred retirement accounts.
There are plenty of decisions where we weigh social pressures and expectations as well as our own desires (should I lease a BMW 3-series or a Toyota Camry? Should I join a country club or play at the county course?). It’s very difficult to resist what we want, or what we think is expected of us. Just remember that every decision you make today is a choice between your current and future self.
And now, Andrew’s pick(s) of the week:
An interesting trend piece about something that happens a lot: Parents Are Buying Homes for Kids Priced Out of the Housing Market
A particularly sympathetic group of people mistreated by our dysfunctional immigration system: “Athulya Rajakumar grew up in the Seattle suburbs, taking dance lessons and competing on her high-school debate team. Last year, she received her bachelor’s degree from the University of Texas at Austin. But Ms. Rajakumar might soon need to leave the country she has called home since age 5, when her mother moved the family from India for a job at Microsoft Corp.”
A nice story: Disabled Teen Who Fled Ukraine Meets John Cena, the Wrestling Star Who Motivated His Journey
The American Red Cross does not allow people with hemochromatosis to donate blood, despite no medical risk to donor or recipient. Why? A Bloody Waste
Finally, do you earn less than 200% of the federal poverty line OR are you on a public assistance program (this includes a ton of things, like Medicaid or Pell Grants)? You may be eligible for free or reduced-cost high-speed internet at home.
I hope this has been helpful. If you liked it, please share it on social media! Also, please send me your feedback, requests, and success stories.
[1] When I try a new streaming service, I typically cancel it right after subscribing so that it only lasts as long as the first period. The default should be for subscriptions to end, not for them to keep going. Inertia is a strong force.
Super useful issue. Thank you!